PRODUCT AND QUALITY Lecture 7: Quality management systems

WHY QUALITY IS IMPORTANT? Quality has direct impact on economic results in both

ways Costs

Quality assurance Poor quality costs

IncomesHigher amount of sale by good perception of

customers Higher price that consumers are willing to pay

COST OF ACHIEVING GOOD QUALITY

Prevention costs Quality planning costs Product design costs Process costs Training costs Information costs

Appraisal Costs Inspection and testing Test equipment costs Operator costs

COSTS OF POOR QUALITY External Failure Costs

Customer complaint costs Product return costs Warranty claims costs Product liability costs Lost sales costs

Internal Failure Costs Scrap costs Rework costs Process-failure costs Process downtime costs Price-downgrading costs

1980

–To

tal Q

ualit

y

1970

–Qu

ality

Man

agem

ent P

rogr

ams

1960

–Qu

ality

War

rant

y

1930

–St

atist

ical C

ontro

l

1920

–In

spec

tion

1900

–Su

perv

ision

1900

–M

anpo

wer

pre

dom

inan

ce

1990

-…

-Ex

celle

nce

Mod

els

THE CENTURY OF QUALITY

2000

-...

corp

orat

eso

cialr

espo

nsib

ility Industrial Revolution

mass production unit verification defective product

Taylor's conception of work

Measurement, comparison andverification activities

Focus on the quantity produced

1920 - INSPECTION

Sampling inspection Use of statistical tools First concerns regarding

prevention: identification of causes for

defective products Focus on the finished product

1930 – STATISTICAL CONTROL

Seven Basic Quality Tools: Flowcharts and Process Maps Check lists Cause-effect diagrams Pareto diagrams Histograms Scatter diagrams Control charts

1930 – STATISTICAL CONTROL

SOME HISTORY OF QUALITY MANAGMENT

In Japan in the beginning of 1950 – WHY ?after world war II Japan hade downfall +economical difficulties + low competitiveness => need to use all recourses efficiently JUSE ( Japanise Union of Scientists and Engineers + officialorganisations + a committee + Japanese enterprices >> objective to imporove fastly the Japanese production and life quality

E. Deming and J. Juran came from USA to Japan => statistical quality control methods => quality control and quality assurance units in the companies + quality groups and circles in the production processKaoru Ishikawa = quality management and techno-social philopsofy

and creativeness in the problem solving

Quality -Jankkila2004 -

First quality standards Customers’ specifications Preventive actions System’s approach Started the concern about

involving everyone in the organization Focus on the manufacturing

process

1960 – QUALITY WARRANTY

Evolution from the QualityWarranty phase Integration of quality on global

management Quality Circles Audit Focus on the work process

1970 – QUALITY MANAGEMENT PROGRAMS

Management Principles: Responsibility delegation Staff autonomy

Satisfaction of needs and expectations Struggle for improvement Adaptation needs Change management Focus on the organizational

process

1980 – TOTAL QUALITY

Quality Management System:a set of organisational measures which transmit maximum confidence that agiven quality level is being achieved with the adequate resource consumption

Characteristics: External focus: at the client Global approach and as an integral component

of the organization strategy Horizontal vision within the organization,

from top management to staff Includes all the concerned parts Continuous learning and adaptation to change

1980 – TOTAL QUALITY

Tools and methodologies:

Re-engineering QFD – Quality Function Deployment Benchmarking Inquiries: clients and staff Brainstorming Balanced Scorecard

1980 – TOTAL QUALITY

Orientation guide Flexible and adaptable instrument Self-assessment and continuous

improvement models Support on the pathway to

excellence Focus on customer

1990 - ... – EXCELLENCE MODELS What is Quality?• Meeting specifications • Meeting customer needs /

expectation• Transparency of service

delivery• Process control • Achieving desired results• Continuous Improvement• Competitive advantage• Added value for society

• Best value for price• Cost effectiveness• Performance measurement• More for less• Satisfaction of

stakeholders• Doing the right things• Doing things right• Doing the right things right

Small improvements in processes Identifying and describing processes Quality control to meet specifications Quality control and financial control are divided.

Focus of potential customer Improvement of staff development Improvement of flexibility of the organisation Results in terms of added value for society

Customer orientation Improvement of results Improvement of management & Organisation Balanced steering of management

ISO 9000: 2000

WHAT IS QUALITY?: COMPARISON OF QUALITY MODELS IN SOCIAL SECTOR

Sector Business Management

Quality Management

Social sector Rehabilitation

Framework Guidelines Standards for QM Standards for service provision

Principles of Excellence

Emphasise Innovation & learning

Control & assurance

Control & assurance

Performance improvement & learning

Method Self evaluation + external audit

External audit External audit Self evaluation + External audit

Orientation Business Excellence

Process and quality control

Performance, process & quality control

Excellence in service provision

Recognition Europe Global Europe Europe

Strategic option Flexibility Efficiency Efficiency Effectiveness

TERMINOLOGY OF QUALITY

Quality policy – The overal quality intentions and direction of an organisationrelated to quality, as formally expressed by top management (ISO 9000:2000)

Quality management That aspect of the overall management function that determines and

implements the quality policy Coordinated activities to direct and control an organization with regard to

quality Quality management system – management system to direct and control an

organization with regard to quality. (ISO 9000: 2000) Quality control The operational techniques and activities that are used to fulfil requirements

for quality part of quality management focused on fulfilling quality requirements Quality assurance All those planned and systematic actions necessary to provide adequate

confidence that a product or service will satisfy given requirements for quality part of quality management focused on providing confidance that quality

requirements are fulfilled (ISO 9000: 2000)

TERMINOLOGY OF QUALITY

Quality planning part of quality management focused on setting quality objectives and specifying necessary operationmal processes and related resources to fulfil the quality objectives (ISO 9000:2000)

Quality improvement part of quality management focused on increasing effectiveness and efficiency (ISO 9000:2000)

Continuous Improvement The process of iteration which results in improving a product.

Quality requirement requirement for inherent characteristics of a product, process or system (ISO 9000:2000)

Characteristics distinguishing feature (ISO 9000:2000) Adding Value Adding something that was not there before

that the customer wants. Quality characteristics inherent characteristics of a product,

process or system derived from a requirement (ISO 9000:2000)

Ch 3 - 10© 1998 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e

QUALITY PHILOSOPHERS

Walter Shewhart

W. Edwards Deming

Joseph Juran

Philip Crosby

Armand Feigenbaum

THE EARLY AMERICANS

W.Edwards Deming introduced concepts of variation to the Japaneseand also a systematic approach to problem solving, which laterbecame known as the Deming or PDCA cycle. Later in the West heconcentrated on management issues and produced his famous 14 Points. He remains active today and he has attempted a summary ofhis 60 years experience in his System of Profound Knowledge.

Joseph M. Juran focused on Quality Control as an integral part ofmanagement control in his lectures to the Japanese in the early1950s. He believes that Quality does not happen by accident, it mustbe planned, and that Quality Planning is part of the trilogy of planning, control and improvement. He warns that there are no shortcuts to quality.

Armand Feigenbaum is the originator of Total Quality Control. He seesquality control as a business method rather than technically, and believes that quality has become the single most important forceleading to organisational success and growth.

THE JAPANESE

Dr. Kaoru Ishikawa´s three main contributions to qualitywere the simplification and spread of technical statisticaltools (the 7 tools of Quality Control) as a unified systemthroughout all levels of Japanese companies, his input to the company-wide Quality Movement and his input to theQuality Circle Movement.

Dr. Genichi Taguchi developed a methodology forminimum prototyping in product design and troubleshooting in production.

Sigeo Shingo created the poka-yoke system to ensurezero-defects in production by preventive measures.

THE NEW WESTERN WAVE

Philip Crosby is perhaps best known in relation to theconcepts of Do It Right First Time and Zero Defects. He isa controversial figure, who has based his qualityimprovement approach on Four Absolutes of QualityManagement and Fourteen Steps to QualityImprovement.

Tom Peters emphasises the importance of customers, innovation, people, leadership and systems. He has 45 prescriptions and 12 traits of a Quality Revolution.

Claus Moller has developed a concept of Personal Qualityon which he sees all other concepts of Quality as based. He provides 12 Golden Rules to help improve your actualperformance level, and 17 Hallmarks of a qualitycompany.

DEMING’S 14 POINTS

1. Create constancy of purpose

2. Adopt philosophy of prevention

3. Cease mass inspection

4. Select a few suppliers based on quality

5. Constantly improve system and workers

6. Institute worker training in SPC

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7. Instill leadership among supervisors8. Eliminate fear among employees9. Eliminate barriers between departments

10. Eliminate slogans11. Remove numerical quotas12. Enhance worker pride13. Institute vigorous education programs on

quality improvement14. Implement these 13 points (Just do it !)

26

DEMING’S 14 POINTS

THE P-D-C-A CYCLE

27

Identify problem.Develop plan for improvement.

Implement plan on test basis

Is the plan working?

Institutionalizeimprovement.

Continue cycle.

Plan

Do

Check

Act

GENERAL IDEAQUALITY MANAGEMENT STANDARD:

If something is made the same way every time with similar materials, then it will have the same quality when finished, preventing...

ISO 9000 CATEGORIES FIRST VERSION

ISO 9001 ~ Suppliers and Designers

ISO 9002 ~ Production

ISO 9003 ~ Inspection and Test

ISO 9004 ~ Quality Management

ISO 9000 STANDARDS FIRST VERSION ISO 9003 Most General of the

conformance standards. Applies only to businesses whose product is final inspection and testing.

ISO 9002 applies mainly to companies that rely on technical drawings and customer specifications for production and installation.

ISO 9001 covered everything in ISO 9002 and 9003 plus the design process. 4 requirements for certification.

IMPORTANT CHANGES OF ISO VERSION 2000

+ Why it is to be doneWhat to do, When, Whom & How to do

Involvement of people

Continual improvements should be achieved

Maintain the system requirements

Improvements

+ Statutory & regulatory requirements

Requirements specified by customer / organization

Product requirements

Value adding processes20 quality elementsApproach

Customer satisfactionProductsMain focus

Version from 2000First versionCriteria

ISO 9001:2000 – MODEL

CU

STO

MER

S

CU

STOM

ERS

Quality Management

System

5.ManagementResponsibility

7. ProductRealization

6. ResourceManagement

8. MeasurementAnalysis and Improvement

Requirements

Satisfaction

Continual Improvement ofthe Quality Management System

ConsumptionProduct

PRINCIPLES OF NEW STANDARD

PRINCIPLE 1 CUSTOMER FOCUSORGANIZATIONS DEPEND ON THEIR CUSTOMERS AND THEREFORE SHOULD UNDERSTAND CURRENT AND FUTURE CUSTOMER NEEDS, SHOULD MEET CUSTOMER REQUIREMENTS AND STRIVE TO EXCEED CUSTOMER EXPECTATIONS.

Key benefits: Increased revenue and market share obtained through flexible and fast

responses to market opportunities. Increased effectiveness in the use of the organization's resources to

enhance customer satisfaction. Improved customer loyalty leading to repeat business. Applying the principle typically leads to: Researching and understanding customer needs and expectations. Ensuring that the objectives of the organization are linked to customer

needs and expectations. Communicating customer needs and expectations throughout the

organization. Measuring customer satisfaction and acting on the results. Systematically managing customer relationships. Ensuring a balanced approach between satisfying customers and other

interested parties.

PRINCIPLE 2 LEADERSHIPLEADERS ESTABLISH UNITY OF PURPOSE AND DIRECTION OF THE ORGANIZATION. THEY SHOULD CREATE AND MAINTAIN THE INTERNAL ENVIRONMENT IN WHICH PEOPLE CAN BECOME FULLY INVOLVED IN ACHIEVING THE ORGANIZATION'S OBJECTIVES.

Key benefits: People will understand and be motivated towards the organization's goals and

objectives. Activities are evaluated, aligned and implemented in a unified way. Miscommunication between levels of an organization will be minimized. Applying the principle of leadership typically leads to: Considering the needs of all interested parties including customers, owners,

employees, suppliers, financiers, local communities and society as a whole. Establishing a clear vision of the organization's future. Setting challenging goals and targets. Creating and sustaining shared values, fairness and ethical role models at all levels

of the organization. Establishing trust and eliminating fear. Providing people with the required resources, training and freedom to act with

responsibility and accountability. Inspiring, encouraging and recognizing people's contributions.

PRINCIPLE 3 INVOLVEMENT OF PEOPLEPEOPLE AT ALL LEVELS ARE THE ESSENCE OF AN ORGANIZATION AND THEIR FULL INVOLVEMENT ENABLES THEIR ABILITIES TO BE USED FOR THE ORGANIZATION'S BENEFIT.

Key benefits: Motivated, committed and involved people within the organization. Innovation and creativity in furthering the organization's objectives. People being accountable for their own performance. People eager to participate in and contribute to continual improvement. Applying the principle of involvement of people typically leads to: People understanding the importance of their contribution and role in the

organization. People identifying constraints to their performance. People accepting ownership of problems and their responsibility for solving

them. People evaluating their performance against their personal goals and

objectives. People actively seeking opportunities to enhance their competence,

knowledge and experience. People freely sharing knowledge and experience. People openly discussing problems and issues.

PRINCIPLE 4 PROCESS APPROACHA DESIRED RESULT IS ACHIEVED MORE EFFICIENTLY WHEN ACTIVITIES AND RELATED RESOURCES ARE MANAGED AS A PROCESS

Key benefits: Lower costs and shorter cycle times through effective use of resources. Improved, consistent and predictable results. Focused and prioritized improvement opportunities. Applying the principle of process approach typically leads to: Systematically defining the activities necessary to obtain a desired result. Establishing clear responsibility and accountability for managing key

activities. Analyzing and measuring of the capability of key activities. Identifying the interfaces of key activities within and between the

functions of the organization. Focusing on the factors such as resources, methods, and materials that

will improve key activities of the organization. Evaluating risks, consequences and impacts of activities on customers,

suppliers and other interested parties.

PRINCIPLE 5 SYSTEM APPROACH TO MANAGEMENTIDENTIFYING, UNDERSTANDING AND MANAGING INTERRELATED PROCESSES AS A SYSTEM CONTRIBUTES TO THE ORGANIZATION'S EFFECTIVENESS AND EFFICIENCY IN ACHIEVING ITS OBJECTIVES.

Key benefits: Integration and alignment of the processes that will best achieve the desired results. Ability to focus effort on the key processes. Providing confidence to interested parties as to the consistency, effectiveness and

efficiency of the organization. Applying the principle of system approach to management typically leads to: Structuring a system to achieve the organization's objectives in the most effective

and efficient way. Understanding the interdependencies between the processes of the system. Structured approaches that harmonize and integrate processes. Providing a better understanding of the roles and responsibilities necessary for

achieving common objectives and thereby reducing cross-functional barriers. Understanding organizational capabilities and establishing resource constraints prior

to action. Targeting and defining how specific activities within a system should operate. Continually improving the system through measurement and evaluation.

PRINCIPLE 6 CONTINUAL IMPROVEMENTCONTINUAL IMPROVEMENT OF THE ORGANIZATION'S OVERALL PERFORMANCE SHOULD BE A PERMANENT OBJECTIVE OF THE ORGANIZATION.

Key benefits: Performance advantage through improved organizational

capabilities. Alignment of improvement activities at all levels to an organization's

strategic intent. Flexibility to react quickly to opportunities.

Applying the principle of continual improvement typically leads to: Employing a consistent organization-wide approach to continual

improvement of the organization's performance. Providing people with training in the methods and tools of continual

improvement. Making continual improvement of products, processes and systems

an objective for every individual in the organization. Establishing goals to guide, and measures to track, continual

improvement. Recognizing and acknowledging improvements.

PRINCIPLE 7 FACTUAL APPROACH TO DECISION MAKINGEFFECTIVE DECISIONS ARE BASED ON THE ANALYSIS OF DATA AND INFORMATION

Key benefits: Informed decisions. An increased ability to demonstrate the effectiveness of past

decisions through reference to factual records. Increased ability to review, challenge and change opinions and

decisions. Applying the principle of factual approach to decision making typically leads

to: Ensuring that data and information are sufficiently accurate and

reliable. Making data accessible to those who need it. Analysing data and information using valid methods. Making decisions and taking action based on factual analysis,

balanced with experience and intuition

PRINCIPLE 8 MUTUALLY BENEFICIAL SUPPLIER RELATIONSHIPSAN ORGANIZATION AND ITS SUPPLIERS ARE INTERDEPENDENT AND A MUTUALLY BENEFICIAL RELATIONSHIP ENHANCES THE ABILITY OF BOTH TO CREATE VALUE

Key benefits: Increased ability to create value for both parties. Flexibility and speed of joint responses to changing market or

customer needs and expectations. Optimization of costs and resources.

Applying the principles of mutually beneficial supplier relationships typically leads to:

Establishing relationships that balance short-term gains with long-term considerations.

Pooling of expertise and resources with partners. Identifying and selecting key suppliers. Clear and open communication. Sharing information and future plans. Establishing joint development and improvement activities. Inspiring, encouraging and recognizing improvements and

achievements by suppliers.

PROCESS APPROACH

Process definitionSet of interrelated or interacting activities which transforms

inputs into outputs

Process definitionSet of interrelated or interacting activities which transforms

inputs into outputs

Ensure continual

improvements

Ensure continual

improvements

Identify the

processes

Identify the

processes

Do it for all value adding processes Do it for all value adding processes

Establish measuring criteria

Establish measuring criteria

Identify the Interactions

to other processes

Identify the Interactions

to other processes

Identify the Inputs & outputs

Identify the Inputs & outputs

PROCESS APPROACH –CONTINUAL IMPROVEMENTS OF PROCESS

PDCA CycleProcesses in terms

Of Added ValueDO

Continual improvements of Processes based on objective measurements

ACTION

Measure results of processPerformance and effectiveness

- Objective MeasurementsCHECK

Understandings & meeting requirements

PLAN

E.G. - PURCHASING PROCESS

Performance Measurements

•Delivery status – On-time, On spec, NCP etc

•Supplier evaluation

Outputs• Receipt of

Material on right condition

• Right Quality Right Quantity

• Right Time

Purchasing Procedure

Interactions to•Storage•Inspection and Testing•Manufacturing•Finance

Inputs• Required item /

quantity / date• Applicable specs• Supplier source• Suppliers capability

to meet our requirements

CHALLENGES IN IMPLEMENTING NEW STANDARD

Communication

Management Support

Other employee Support

New ISO

Encouragement

TOTAL QUALITY MANAGEMENT CONCEPTTotal quality management represents a set of management

principles that view customer-focused quality improvement as the driving force in all functional areas and at all levels in a company. These management principles include customer focus, management leadership, strategic quality planning, company-wide commitment, continuous improvement, and employee involvement.

1. Customer defined quality2. Top management leadership3. Quality as a strategic issue4. All employees responsible for quality5. Continuous improvement6. Shared problem solving7. Statistical quality control8. Training & education for all employees

TOTAL QUALITY MANAGEMENT-TQM CONCEPT

Customer defines quality, and the customer’s needs are the top priority

Top management must provide the leadershipfor quality

Quality is a strategic issue Quality is the responsibility of all employees at

all levels of the organization

TOTAL QUALITY MANAGEMENT-TQM

All functions of the company must focus on continuous quality improvement to achieve strategic goals

Quality problems are solved through cooperationamong employees and management

Problem solving & continuous quality improvement use statistical quality control methods

Training and education of all employees are the basis for continuous quality improvement

QUALITY AWARDS

Quality awards and certifications have been instrumental in stimulating the growth of quality management worldwide. The Malcolm Baldrige Award is given annually to a maximum of 6 U.S. firms that excel in quality. ISO 9000 certification of a company’s quality system is required if that company wishes to do business with the European Common market. The Malcolm Baldrige Award (USA award) The Deming Prize (Japan Government Award) Industry, regional, and company awards

Institute of Industrial EngineersNASAEuropean Quality Award

EUROPEAN QUALITY AWARD SCHEME